Indivior Pharmaceuticals, Inc.

Good morning, everyone. Before we begin, I need to remind everyone that on today's call, we may make forward-looking statements that are subject to risks and uncertainties, and that actual results may differ materially. We list the factors that may cause our results to be materially different on slide two of this presentation. We also may refer to non-GAAP measures, the reconciliations for which may also be found in the appendix to the presentation that is now posted on our website at endivir.com. I'll now turn the call over to Mark Crossley, our CEO.

Thank you, Jason, and good morning and good afternoon, everyone. Thanks for joining us. Joining me today are Dr. Christian Heidrader, our Chief Scientific Officer, Jeff Burris, our Chief Legal Officer, and Ryan Preblek, our Chief Financial Officer. I'll quickly highlight our results and some updates from our release earlier in the month, and then Ryan will detail the financials and our full year of 2024 outlook. We'll then open the line for questions. Our results for the second quarter were in line with the expectations we pre-announced earlier this month. Sublocade delivered year-over-year net revenue growth in the quarter of 24%. As we previously discussed, Sublocade's growth continued to be impacted by transitory headwinds, which we expect to ease during the second half and especially as we look into 2025. There are two significant new items in today's announcement. The first is that we've taken a $75 million provision for the agreed quantum of an expected settlement for opioid litigation brought by certain municipalities and tribal nations. This continues our path of proactively resolving legacy litigation items at the right value for shareholder certainty. The second item is the Board's decision to initiate a new $100 million share repurchase program, which we will seek to execute in an accelerated timeframe, given the attractive value the shares currently represent. This new buyback program is a strong indication of our confidence in delivering on our intermediate and long-term objectives for sublocate, exiting 2025 at a billion-dollar net revenue run rate and achieving greater than a billion and a half in peak annual net revenue. I'm not going to repeat everything we outlined in our July 9th release, but I do want to provide a few incremental updates since that announcement. First, we're starting to see the benefits of our increased commercial investments behind sublocate. Recall that over the past year we've increased our field force by 50% and our justice systems team by 25% and we're seeing significant increases in customer engagement and activation as a result. In terms of key metrics, through the end of Q2 we've increased active sublocated dispensing HCPs to over 7,200 from approximately 6,700 at the end of fiscal year 2023. and we've activated approximately 120 new CGS facilities thus far in 2024 to reach over 700 total activated justice system accounts. Second, we've completed the actions related to the cessation of Preceris sales and marketing. We thank our former colleagues for their professionalism and past contributions to Indivior, and we wish them the very best for the future. Additionally, we anticipate making product available to patients for up to a year to help manage treatment transition. Third, we expect fulfillment of the BARDA contract for OPPE to begin this quarter, which as a reminder will amount to approximately $8 million in net revenue in fiscal year 2024. Lastly, in terms of key items for the quarter, we're pleased to complete our U.S. primary listing at the end of June with strong support from shareholders. Over time, we expect the benefits to be increased awareness of Indivior among the U.S. investment community and U.S. index inclusion. As part of this effort, we'll begin reporting in U.S. GAAP next year, starting with our first Form 10-K filing in March 2025. This is a key requirement for U.S. index inclusion. Next, I want to call out some highlights from our regular quarterly reported card. Beginning with sublocated patients and treatment, which grew 49% year-over-year to $160,400 at the end of the second quarter. On a sequential basis, this represents a 7% increase with over 10,000 patients gained in the quarter. Recall, we target greater than 270,000 patients to deliver our peak net revenue goal of greater than $1.5 billion. Sublocate dispenses of $155,700 increased 25% versus last year and 5% versus the prior quarter. The difference between the sequential dispense growth rate of 5% and the net revenue growth of 7% is primarily due to destocking activity in Q1. I'm also pleased to report that our alternate sites of care efforts are continuing to show good progress. The number of sublocated injections at these sites increased 55% in the second quarter compared to the previous quarter, and our network has now grown to over 1,200 locations across 22 states with five partners. Looking at diversification, we continue to build a funding, trial, and experience environment for Otvi, which we're confident will translate into paying customers over time. In the short term, we are facing some pushback to adoption from the views of certain harm reduction advocates. We'll continue to engage these voices with science and real-world evidence to counteract them and accelerate adoption, as we believe the ultimate goal must be to save lives. Meanwhile, as I just highlighted, we expect delivery on the BARDA contract to begin this quarter, which will account for most of these net revenue in fiscal year 2024. Turning to our rest of world business, we continue to see good growth in contribution from our new products, Sublocate and Suboxone Film. Their solid progression is helping us offset the ongoing challenges to our legacy tablet products. In particular, ex-US sales of Sublocate grew 25% year-over-year in the first half to $25 million. with growth led by Canada and an increasing contribution from the Nordics. You should note that our order timing and elevated stocking in the year-ago quarter had an adverse impact on overall rest-of-world performance. That said, we continue to expect modest growth for the full year. Turning to our pipeline, a few highlights to mention, starting with Sublocade, where we've completed the clinical studies supporting important label updates for rapid induction and alternate sites of injection and will be making regulatory submissions to the FDA this quarter. We announced that Indivio 2000 has commenced phase two development with patient dosing starting last month. Our excitement about this asset reflects our belief in the significant unmet need for non-opioid option for patients as part of the OUD treatment continuum. Turning to AEF 0117 for cannabis use disorder, We expect top line results from the clinical phase 2B study this quarter, which we'll release when final. In terms of next steps, we would then expect to have an end of phase 2 meeting with the FDA to discuss the phase 2B data as well as clinical phase 3 study design and clinical endpoints. We'll then evaluate the outcome from that meeting, the clinical results, and our market research to form a view on commercial potential. This will inform our decision on whether to exercise our option on the asset and enter phase 3 development. Finally, on clinical developments, I'll just quickly highlight that we discontinued INDV 5004, Drenavant, for acute cannabinoid overdose based on our assessment of a limited market opportunity for the product. Moving to capital allocation, as I noted, we're today announcing a new $100 million buyback based on our confidence in delivering against our medium-term profitable growth framework. We're also making good progress in resolving legacy litigation matters. As we disclosed at the start of this month, we've agreed to pay $85 million to certain end payers ending the antitrust trial that was scheduled to begin on July 15th. In addition, we are today taking a $75 million provision for an agreed settlement amount for certain opioid litigation, including the opioid MDL matters related to municipalities and tribal nations. While this quantum is agreed and payable over multiple years, the parties still must negotiate material terms and conditions of the final settlement agreement. We expect to make a further disclosure upon reaching that final settlement. With that, I'll hand over to Ryan.

Thanks, Mark, and good morning and good afternoon to everyone. This was a challenging quarter as a result of the transitory headwinds affecting sublocate and the changed market outlook for PSERIS. I nevertheless want to reiterate Mark's confidence that we are on track to deliver against our medium-term profitable framework and to create significant shareholder value. For today, I will start my comments by summarizing the financial impacts of our decision to end the sales and marketing of Becerras before briefly walking you through the financials for the second quarter and closing on our four-year guidance, which we revised on July 9th. Our strategic decision to end the promotion of Becerras will result in a charge of approximately $65 million. with $42 million recognized this quarter and the balance of approximately $23 million in Q3. This charge includes severance costs, write-offs for inventory, equipment, and intangibles, and other termination payments. The cash impact will be approximately $20 million and will largely be incurred in Q3. On an annualized basis, we expect this result in savings of approximately $50 million, with $20 million included in the revised SG&A guidance for full year 2024. Turning to the performance drivers in the quarter, starting with the top line. Total net revenue of $299 million reflected growth of 8% versus the year-ago quarter, both on a reported basis and at constant exchange rates. By geography, total U.S. net revenue grew by 12%. The rest of the world business was down 10%, 8% when excluding FX. The quarter was negatively impacted by shipment timing in this quarter and elevated stocking in a comparable period last year. Sublocated net revenue outside of the US grew 30% year-over-year to $13 million in the quarter. Total sublocated net revenue was $192 million, up 24% versus Q2 of last year. As previously discussed, this was lower than we had expected due primarily to Medicaid disenrollment impacts lower stocking levels, and delays in some newer CJS account activations. On a sequential basis, Subletrade net revenue grew 7%, slightly ahead of dispenses given the destocking activity in Q1. For Opfey, net revenue in the quarter was minimal. For Suboxone Film, the average share of approximately 16% in the quarter was down compared with both the first quarter and the year-ago quarter as expected. As a reminder, we do not promote Suboxone film in the US. Moving down to P&L, our second quarter adjusted gross margin of 84% was up slightly versus the prior year quarter, primarily reflecting favorable manufacturing variances and improved product mix from increased sublocated net revenue. Adjusted SG&A expenses were $144 million in the quarter, an increase of 15% versus Q2 of last year, reflecting the incremental commercial investments we have made. R&D expenses were $27 million in the quarter. The decrease in R&D reflected phasing of expenses related to post-marketing studies for sublocate, partially offset by pipeline development efforts, which will accelerate into the second half of this year. Adjusted operating income of $79 million in the second quarter was up 11% versus the prior year. Lastly, on the P&L, Our adjusted net income of $60 million grew 7% in the quarter, reflecting the dynamics I just highlighted. Quickly touching on the balance sheet and our capital position. We ended the second quarter with gross cash investments of $405 million. During the first half, positive cash flow from operations was offset by litigation-related payments and by our existing $100 million stock repurchase plan. which we expect to finish by the end of this month. As Mark mentioned, today we announced a new $100 million share repurchase program to reflect our confidence in the business, and we are provisioning $75 million for an agreed settlement for certain opioid litigation with the quantum agreed and payable over multiple years. I would highlight that the $75 million provision will be remeasured once we reach final settlement with all the parties. The provision would then be reclassified to a liability, and the amount would be lowered to approximately $65 million by using a risk-adjusted rate versus a risk-free rate when discounting to the net present value. Closing on our full year 2024 guidance, which we updated on July 9th, I want to highlight a few key takeaways. Our revised total net revenue guidance of $1.15 billion to $1.215 billion reflects the transitory headwinds we are facing in full year 2024 and at the midpoint represents 8% year-over-year growth. As we noted on the investor call on July 9th, we expect to move beyond these items as the year progresses and especially as we look into 2025. For Sublocator, guidance of $765 million to $805 million represents 25% year-over-year growth at the midpoint. and keeps us on track to exit 2025 at $1 billion run rate and on a path to exceed $1.5 billion. For OPFI, based on a slower than anticipated ramp, we recalibrated our net revenue expectations for full year 2024 to $9 million to $14 million. The majority of this reflects the BARDA order of approximately $8 million that we expect in the third quarter. Our guidance for film is unchanged. Our guidance for OPEX of $550 million to $560 million reflects a reduction of $25 million to $30 million versus prior expectations. This reduction includes the $20 million of anticipated cost savings relating to PSERIS, as well as lower volume dependent expenses. Our guidance for R&D is unchanged. Taking all the pieces together, we now expect adjusted operating income to be between $285 million and $320 million. At the midpoint, this implies solid year-over-year growth of 12% and an approximately 100 basis point margin improvement. I will now turn the call back over to Mark.